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Bribery

We are in a series outlining the big ideas that would serve as the foundation for Tim’s proposed healthcare reform plan. Click here to find the prior posts.

Our youngest will soon start her junior year in high school, which means it is time to fire up the ‘college process’ machine again, which is closely linked to the ‘tuition paying’ machine. Oy vey.

Which also means it is time for Dad to pull out his bribery, er, incentive plan when it comes to scholarship applications. If you’ve ever taken a kid through this process, you know what I am saying.

The economic argument is compelling: where else can you spend 10 hours (filling out applications) and get $1,000…that is $100 an hour? But it does not work. If it did on your kid, the rest of us want you to just shut up and enjoy your perfect child.

I get it. Junior year is busy and most kids are not skipping the game on Friday night to stay home and write one more essay on how they’d save humanity on the off chance the Kiwanis Club might give them $500.

So, for my own economic self-interest I use bribery, er, incentives. I’ll split the scholarship pot. You do the work and save me some money, and a chunk of that will come back to you. (If your comments are about my lame parenting, send your email to autodelete@nowhere.com.)

I want to suggest that the government, too, leverage incentives before resorting to compulsion. And its single biggest tool in that regard is the tax code. We believe that home ownership is a good thing (I know, big debate on this one…go with me a minute), so we allow people to deduct mortgage interest. We like people to give to charity, so they can deduct that, too.

The math on this whole healthcare deal works better if we get everyone to participate at the level they can and should. So let’s use the tax code to nudge people to take action that benefits the taxpayers who are ultimately footing the bill on the massive gap in funding.

We’ve already said that we’d direct the tax-code minions to figure out how to give the same incentives for paying premiums to companies or individuals so that the market could decide the best way to play that decision. We’d also ask them think broadly about how to use this tool to advance the other ideas we’ve laid out.

If a healthy family wants to buy a low premium catastrophic policy that only kicks in when their healthcare bills get really high, why wouldn’t we encourage them save as aggressively as possible for the parts of their care where they are paying cash out of pocket? Expand HSAs…yep, I am still a market, personal liberty guy. So you conservatives, please stop toilet papering my house.

If we give you a tax incentive to use your own money, then we need a little less of ‘our’ money, right? And anything that gets individuals more directly vested will drive more innovation, which is ultimately the force we most need to fix this mess.